THE WALL ST 'S TRANSITION TO A LOW CARBON ECONOMY BY ACHIEVING NET ZERO EMISSIONS BY 2050

America’s biggest banks are in a jam.

Under pressure from environmentalists, they’ve vowed to throw their weight behind the transition to a low-carbon economy by achieving net-zero emissions by 2050.

But standing in the way are a slew of obstacles. High on the list is that there is no set standard to calculate the climate impact of finance activities. That’s a real problem, experts say, because the lack of uniformity makes it difficult for banks and their investors to assess progress.

If you want to lose weight, you need to know how much you weigh,” said Ivan Frishberg, first vice president of Amalgamated Bank. “It’s absolutely essential.”

Enter the Partnership for Carbon Accounting Financials, a global coalition of finance firms working to solve that problem.

Launched in 2015 by 14 Dutch financial firms, PCAF’s aim is to forge—and spread—a standard methodology to help financial institutions measure their so-called financed emissions.

The thinking goes that once companies develop a deeper understanding of their carbon footprint, they could begin to answer three critical questions about their path to net zero.

“Which clients should I engage, should I divest, [and] what type of products can I develop to help them transition?” said Giel Linthorst, the executive director of the PCAF secretariat.

PCAF for several years was limited to firms in the Netherlands. But it’s since spread to North America and other regions, increasingly becoming a center of gravity for firms that are grappling with climate change—and intensifying pressure to do something about it.

Amalgamated, where Frishberg heads the bank’s sustainability-related work, is credited in part with adapting the Dutch initiative to the North American market and taking PCAF global.

As it stands, 111 firms with $27.9 trillion in assets have committed to measuring and disclosing their financed emissions through PCAF’s methodology. That includes Bank of America Corp., Citigroup Inc. and Morgan Stanley, which have all joined since July.